Haliburton Mills Inc. is a large producer of men's and women's clothing. The company uses standard costs for all of its products. The

standard costs and actual costs for a recent period are given below for one of the company's product lines $($per unit of product$)$:

During this period, the company produced $6,000$ units of product. A comparison of standard and actual costs for the period on a total

cost basis is also given above.

There was no inventory of materials on hand to start the period. During the period, $20,400$ metres of materials was purchased and

used in production. The denominator level of activity for the period was $12,340$ hours.

$1.$ For direct materials:

a$.$ Compute the price and quantity variances for the period. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

b$.$ Prepare journal entries to record all activity relating to direct materials for the period.

Record the materials price variance. Record the materials quantity variance.

$2.$ For direct labour:

a$.$ Compute the rate and efficiency variances. $($Indicate the effect of variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

b$.$ Prepare a journal entry to record the incurrence of direct labour cost for the period. $($List debit entries first$).$

Record the incurrence of direct labour cost for the period.

$3.$ Compute the variable manufacturing overhead spending and efficiency variances. $($Indicate the effect of each variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$4.$ Compute the fixed overhead budget and volume variances. $($Indicate the effect of variance by selecting $"$F$"$ for favourable, $"$U$"$ for unfavourable, and "None" for no effect $($i$.$e$.,$ zero variance$).)$

$5.$ On seeing the $$2,520$ total cost variance, the company$$s president stated, $$It$$s obvious that our costs are well under control.$$ Do you agree?

multiple choice

Yes

No